Jonathan Chesnerhttps://jonathanchesnerblog.wordpress.com
(my keyboard spits hot financial fire)Thu, 22 Feb 2018 04:50:56 +0000enhourly1http://wordpress.com/https://s2.wp.com/i/buttonw-com.pngJonathan Chesnerhttps://jonathanchesnerblog.wordpress.com
The Next Chapter….https://jonathanchesnerblog.wordpress.com/2016/02/11/the-next-chapter/
https://jonathanchesnerblog.wordpress.com/2016/02/11/the-next-chapter/#respondThu, 11 Feb 2016 03:36:50 +0000http://jonathanchesnerblog.wordpress.com/?p=83Continue reading The Next Chapter….]]>Dear lovely readers of the past two months… all 350 of you (which is more than my mom, financial advisor, and 4-5 devoted extended family members) it is with mixed blessings that I am signing off on this awesome experiment in financial hot keyboard fire for a little while.

While some say finance is boring or hard to understand I beg to differ. Finance is the language of money. While money won’t solve all your problems, it certainly allows you to tackle them in sweet clothes and the comfort of leather car seats. I hope my blog helped inspire you to learn a little bit more about money.

Anyways, I have been blessed with a job opportunity at a brokerage and I’m spending my remaining few weeks getting as much surfing, golfing, and snacking in as possible before I have to buckle down and learn even more. Additionally, my new job requires a series of financial certifications that may put certain restrictions on how much hot financial fire I can spit.

Special thanks to:

Wilma Engel of Engel Consulting for being so supportive of my financial learning. Jon Sundt of Altegris for giving me the idea to start writing. Patrick “Tricky” McCuen of TD Ameritrade for talking finance between surfing and tacos. ACB for being ACB. Uncle Robby and Uncle Billy for the encouragement. Mark Zuckerberg’s mom for obvious reasons.

Until my next post (which may be soon as I was at an automation/robotics expo and saw some stuff that I want to write about…)

I don’t know if this is just a massive correction or the entire market is going to slide into bear territory, but if it does go into a bear market…

I would hate to be the CEO of Uber, AirBnB, Snapchat, or any other unicorn. These guys are bleeding more cash than M.C. Hammer in the early 90’s and courted investors with rags-to-riches dreams of successful IPO launches. We are no longer in the days of interest rates at zero, a carefree stock market, and venture capitalists with nothing better to do than throw money at something with the word “disruption” in it.

If you are going to go public you do it while everyone is drunk and dancing stupidly in an overvalued bull market. You sure as heck wouldn’t want to launch a company like Zygna during a recession. Many of these companies (Snapchat, Uber) were already prepared to go public, they just didn’t feel the market was receptive. So that brings up the point that if things get darker, there are two options:

A) If you won’t go public, you need to get more venture capital. It’s tough to get venture capital if investors don’t think they can cash out. If investors can’t cash out, they won’t risk anymore. Without money you’re done and hopefully a nice dim-sum restaurant can open up in your failed app’s San Francisco office space.

B) You don’t want to go public, but existing investors want to cash out. You are forced to go public, but you do it in a terrible market. You launch an IPO for a money losing company to a jittery crowd. Your market cap shrinks, existing investors get burned, and hopefully a nice dim-sum restaurant opens up in your office space when you downsize.

*Disclaimer, invest at your own risk. Do your own thinking before you put money down. Pretty much anything that would be on Goldman Sach’s disclaimers applies here, so don’t sue me.

I think I can say with conviction that I have never seen a 100% authentic Sasquatch. God doesn’t mention Sasquatches in the Bible and I have yet to meet anyone that could pass a drug test that has seen one. Yet the world holds out hope that perhaps Sasquatches exist…

While Sasquatches may be the stuff of legend, a far more common fairy tale is the belief in an investor that will get you 20%-plus returns every year and just sits around waiting for your call. Like all rumors, they are fueled because we look back at financial heroes and jealously wish we had been their college roommates.

We ignore the fine print like their 2-20 fee structures and requirement of a last name like Rothschild to invest. We assume that if they can have one year or trade create a 300% return, we can too.

Those that know me know that I’m prone to get really competitive. So if Peter Lynch averaged 29% return for 13 years then that’s what I’m going for. Disregard the fact that I occasionally have the risk tolerance of a bed-wetting 10-year old at a Six-Flags Theme Park. If Peter Lynch set the bar, then I’m looking at the bar. China’s slowdown, a 7-year bull market, and Saudi Arabia running out of money be darned!

Post GFC, it was pretty easy to feel like you could reach the bar. As long as you had half a brain and were diversified, there were a couple of years that were actually difficult to screw up. As we stretch into the late innings of this bull market, it’s easy to take for granted the market moving forward like a Jamaican sprinter, especially after the bottom of 2009.

Anyways, this year I’m committed to getting better, and being a more patient investor. (In addition to learning that golf is just a game and surfing is just for fun). While it’s getting easier to laugh at blowing a 2-foot putt, 2015 tested my patience with seeing flat returns or even worse…RED. While I’m excited about 2016 and what the New Year plans to bring, my resolution is to better handle this volatility. I don’t know how Peter Lynch would have handled 2015 but I do know that he probably would have been on the lower end of his 29% average. That helps me sleep better.

Once again, this is my non-wall street opinion. With the market pissing its pants this week and being this far advanced into a bull market, lots of people are scared we are headed for disaster. While things will definitely stay rocky, I don’t see disaster on the horizon. There are a bunch of heavyweights sharing my view, but I certainly don’t want to get stuck in an elevator with Jeff Gundlach justifying myself. I’ve lived through two solid financial disasters. Looking back, there were several things that clearly stood out before the hammer dropped that I don’t see.

Ridiculous consumption

Massive uneducated speculation

The first disaster I had the joy of experiencing was the tech bubble. It’s very hard to relay the enthusiasm that entailed buying dog food online with a 56k modem connection (through an AOL phone line!). While the 15 minutes it took for a website to load may not have been as fast as jumping in the car and buying it, the novel-ness of the approach made any stock with a “.com” ending seem like you were one-upping Pablo Escobar’s cocaine business for ROI. People that wouldn’t know a tulip from a tweet joined the melee and seemed perfectly content to put their money in the dot-com equivalent ending of the movie “Thelma and Louise”.

The second bubble/GFC was a bit more recent and easier for me to see the writing on the wall. People that had barely paid off their cars owned real estate portfolios. These people then traded amongst each other over vacant McMansions requiring 2-hour commutes to jobs that could pay enough to justify their price tags. Somewhere between the trends of gold dental grills, spinning rims, and rappers pouring champagne on the floor…it was obvious there was too much money going around.

Personally, things look like a correction to me than the start of a serious recession. Everyone is prepared for the volatility and nobody is pouring champagne on the floor (certainly not the Saudis!). While it’s anybody’s guess what the future holds, if Zygna were up at 100 a share right now, then I’d be running for the hills…

*Sidenote: the two things I don’t see here (ridiculous consumption and massive uneducated speculation), were pretty obvious in China. My hope is that with everything much rosier in the US, the world will decide to park its money here. I’m sure things stay volatile. Thanks to everyone whose been reading the blog. If you like it: share it with a friend.

I know what everyone who has been on here is thinking, “Jonathan, we love the writing…but seriously, when do I put a down payment on a yacht?”

Unfortunately, for anyone who has turned on the news or opened the WSJ the last few days, things have been rough. Now, I don’t want to point fingers…actually screw it, we’re point fingers. It’s China. China, China, China. The developed world decided to let China sit at the big boy table and pretend to be one of us and now it’s messing everything up.

One of my best metaphors for our relationship with China is like the basketball player Allen Iverson and the NBA. I don’t really care about professional sports, but every now and then a player comes along so radically different, so good, and so darn ’hood’ that I feel compelled to join the bandwagon. Allen Iverson was that guy growing up.

“AI” was the closest thing to a true thug the basketball courts had seen at the time and if there’s one thing Middle America loves, its co-opting street culture. Iverson made the NBA very rich and sold tons of Reeboks, jerseys, and elbow sleeves. The problem with Allen Iverson and the NBA was a collision of cultures. The NBA (like the world) is used to a culture that likes its players to show up to practice, outwardly try be role models, and generally stay out of trouble. Allen Iverson (sort of like China?) doesn’t really like following orders, picks fights like a pre-married Kanye West, and has a financial discipline that would make Suze Orman jump off a bridge.

So in conclusion, over the last few days we’ve been witnessing an Allen Iverson flare-up because the world that wanted Allen to behave like A.C. Green.

I’m not just talking about the bigger picture:

-Like fact that commodities are too darn scaled up.

-Like the overwhelming proportion of China’s population that are too poor to be taking club selfies on iphones.

-Like a country that has lost it’s primary job of making Air Jordan’s cheaply.

I’m talking about us forgetting that we are in bed with a heavily regulated country that does not share many of the values (economic, religious, political freedoms) that we assume everyone enjoys.

China’s stock market is still a hot mess. It drank way too much and they still aren’t doing a good job letting it puke and rally. There is still a lot of money to be made off China (just slightly less than before) but this new year has brought a big wake up call that we are playing with a country that doesn’t play by everyone else’s rules. Anyways, it’s been a really rough few days. These things happen. The economy goes up and down. It sucks but no reason to freak out any more than I usually freak out. I’m still very bullish on FB, but I need China to stop wilding out…

*I just remembered it was AI who started the whole Chinese letter (Kanji) tattoo craze. So further proof, AI is just like China…

**side note: anyone remember when NFL player Randy Moss got fed up with a parking meter maid and pushed the meter maid’s cart down the road with his Mercedes….awesome!

While Mr. Market may not be as tough to predict and temperamental as a stage mother going through menopause, it really shouldn’t be much of a surprise that as soon as I published my article on GoPro, a few hours later the market opens the New Year with a solid correction. Like a jilted ex-lover, GoPro is one of the few companies to go up. While I may be known to overvalue my importance in this world, even I was shocked to see the market react so personally to my predictions.

Thankfully, Mr. Market is back to his senses, GoPro slowed down, FB is moving back up…and maybe we have “FANG” round 2 (facebook, amazon, netflix, google), even though I’m more of an “F-U” type of guy (facebook and unconcerned).

While we wait to see what new drama the world brings coming into 2016, I figured I’d share two companies I’ve got my eyes on…

Inditex – You may not have heard of Inditex, but if you are young (or old and want to dress like your daughter) you’ve probably heard of ZARA, Inditex’s crown jewel. ZARA’s business model is: copy something in demand, put it on shelves in about 2 weeks, and sell it for way less than anyone else. It’s that kind of “Oh…..dayum!” type business model.

Inditex is the scourge of luxury fashion. Why buy an on-trend jacket from Nordstrom or Bloomingdales that is $700 when you can get one that looks the same for $89 at ZARA? It’s no surprise that the CEO of the company wrestles with Bill Gates for the title of richest man in the world.

While it would be wise for a company like LVM+Henessey or Kering to create some type of middle of the road between high and fast fashion that can capture their fashionista’s lost dollars, they seem perfectly content to stay more on 5th Avenue then bridge and tunnel it to New Jersey. Competitors like H&M, Old Navy, and Uniqlo aren’t leading the pack (and Old Navy comes with it’s two lame siblings, GAP and Banana Republic). I look at ZARA the way I look at Walmart back in the day. Sure the stock has soared and is still high when factoring in all the splits, but I feel like this is one of the those long-term plays.

Anyways, what I’m on the lookout for some stability in the market, EU, and Spain specifically. Spain is where the stock trades and they just underwent a pretty crazy election (like “the elected president was sucker punched in the face during campaigning” crazy). I’d like to see a bit more encouraging things before I put some money into Inditex. I’d also like to see if we could get the guy that sucker punched their president near Donald Trump…

Atlassian – Atlassian is a tech company that makes a bunch of programs that businesses use to increase productivity. While I may not work at a Fortune 500 company, apparently 1 in 3 of them are using Atlassian’s products. What I like about Atlassian is that it’s the “anti-tech” tech company.

While things may not be at Pets.com level, it still seems like the best way to do things in tech is to take hundreds of millions of dollars from investors before thinking about how to make hundreds of millions of dollars from customers. Sometimes I think Jeff Bezos wakes up with nightmares of Amazon.com actually trying to make a significant net profit.

Anyways… What separates Atlassian from riff-raff, is that it’s already making money. It didn’t use an IPO to move into the black. This company has had earnings growth every year since it’s inception. It’s definitely something to keep your eyes on, I like that it’s in tech but actually tries to run a business the way it’s supposed to (by earning money).

What I’m waiting on Atlassian to do before I throw some money in is get a bit more institutional ownership and to see it start moving past it’s previous high. I feel like tech stocks play on a lot of hype and I’m waiting to see the ticker (TEAM) get more attention and start to break out before I put in.

Anyways, till next time.

-Jonathan

(wearing glasses is instant credibility)

If you have any suggestions for articles you’d like to see written or feedback either comment or shoot me an email at jchesner@gmail.com!

DISCLAIMER: As always, investing has inherent risks…blah blah blah.

These writings are my thoughts and should not be taken as gospel truths. Read my stuff, do your own research, then be responsible for your own actions. AKA, this is to warn you not to sue me because you need to be responsible enough to make your own decisions before you open your wallet.

]]>https://jonathanchesnerblog.wordpress.com/2016/01/06/18/feed/0jonathanchesnerunnamedGoPro-bably Not…https://jonathanchesnerblog.wordpress.com/2016/01/03/gopro-bably-not/
https://jonathanchesnerblog.wordpress.com/2016/01/03/gopro-bably-not/#respondSun, 03 Jan 2016 19:10:52 +0000http://jonathanchesnerblog.wordpress.com/?p=11Continue reading GoPro-bably Not…]]>Lots of people in 2014 decided, “You know what, I know GoPro’s are a really trendy item with a lot of hype this Christmas. I’m sure there are enough extreme mountain bikers, great white shark riders, and skydivers in this world to provide a sustainable user base. Paying up to almost $90 a share for a company with one product that doesn’t do much more than the video camera on my cellphone seems like a great idea.”

Anyways, people do stupid things around Christmas. Everyday we share the road with people that thought a collection of Beanie Babies could put their kids through college. I’m sure there are parents in therapy that paid a 300% markup in a dark alley behind Toys R’Us for a Tickle Me Elmo several years ago. Free markets have winners and losers, and every loser holds out a glimmer of hope that having paid the price of a car for a Princess Diana Beanie Baby will eventually be seen on par with buying Microsoft or Starbucks stock at the IPO … I don’t blame anyone who bought at 2014’s peak to beat the drum in hopes of eventually turning a profit.

From my perspective I don’t see much to get excited about in GoPro long term. The company sells products that can easily lose interest with fickle consumers and has done a horrible job giving consumers reasons to upgrade. The stock may go up or down a bit depending on how it’s upcoming drone does but unless they absolutely hit it out of the park it’ll be tough to recreate that beanie baby frenzy that saw the stock trade near $90.

As always, all the legal jargon about invest at your own risk and make decisions on your own applies here. Don’t sue me for anything and if you like GoPro or your name is Nick Woodman don’t try to fight me…

]]>https://jonathanchesnerblog.wordpress.com/2016/01/03/gopro-bably-not/feed/0jonathanchesnerGET DAT MONEY….https://jonathanchesnerblog.wordpress.com/2015/12/22/thoughts-from-my-desk/
https://jonathanchesnerblog.wordpress.com/2015/12/22/thoughts-from-my-desk/#commentsTue, 22 Dec 2015 16:39:26 +0000http://jonathanchesnerblog.wordpress.com/?p=3Continue reading GET DAT MONEY….]]>Apart from Mark Zuckerberg’s mom, I am probably the most optimistic person on the planet when it comes to Facebook stock (nobody advocates for their kids like Jewish mothers…).

I will get straight down to the nitty gritty. I am not an analyst. I will not overwhelm you with tons of numbers, ratios, and moving averages. Look that stuff up online, there’s plenty of quant geeks to back me up.

I cannot predict what will happen next year. Warren Buffett is positive going into 2016. Apart from drinking Coca-Cola for breakfast, I think he makes good decisions. Economy expands, stock market rises, Hooray! Economy falls off a cliff, everyone loses and nobody can afford to get food poisoning from Chipotle…(so everyone loses).

Tech kicked ass and took names in 2015. I don’t have the desire to go through every sector. There are definitely winners, but they weren’t easy to spot. I’m young and relatively computer savvy. I like to invest working with business models that I understand. I understand companies want to sell me stuff. I’m not naïve; I know LeBron James would wrap his feet in diapers if the price were right (and if those diapers were marketed in such a way that made me feel cool, I would probably pay a premium to wrap my feet in said diapers too). So if the economy hums along and things don’t get too crazy…how will people sell me stuff?

Facebook!!!

Mr. Zuckerberg is sitting on digital real estate that is the equivalent of all the blue squares in Monopoly.

Let’s get theoretical….If I was given the advertising budget for AB-Inbev (which is easy because I love Bud Light) where would I advertise? Television becomes less captivating all the time and I used to be on it (true story). TV advertising is also really expensive. I once was in a commercial for skittles and I ended up taking home about 15k for a few hours of work. I think only one of Rupert Murdoch’s ex-wives could brag about getting more money for less work. Also, when it comes to TV how do you know if someone has prerecorded a show and is fast-forwarding your expensive ad buy? What if the stuff you are trying to sell doesn’t make sense for promotional placement in a netflix show? What if the demographics of people you’re trying to reach are 13 and won’t even bother looking up from their mobile phone during a conversation at the dinner table?

I doubt anyone is stupid enough to be surprised at the growing domination of digital advertising. This is a two horse race: Google and Facebook.

Let’s get personal. Last year I was trying to sell a product for wheelchairs I invented. I had a distributor, a website, and a great idea. The only thing I needed was to get it noticed…hence advertise! I used Facebook ads and Google AdSense and the ROI I got from Facebook was better and cheaper. Facebook’s user interface was easier to use, targeted my audience better, and resulted in way more traffic to my website. The famous fund manager Peter Lynch said invest in what you know… I know Facebook was money well spent.

Zuckerberg has data like Charlie Sheen has A.I.D.S. Zuckerberg has users like Bill Cosby has accusers (more every day!) Every comment, every click, and every scroll is to his benefit, which in turn benefits advertisers.

Anyways, my point is Facebook and Instagram continue to grow. Mr. Zuckerberg is sitting on some of the best properties, best user insights, and highest profit margins in the business. Google is an older dog. I don’t underestimate it, it’s been growing like crazy since 2004. Facebook went public in 2012 and it’s already kicking ass. I liked Kobe…but moving forward I’m excited to watch LeBron (if we’re going to be honest, FB is more like Steph Curry and Google is closer to Lebron).

Couple things:

You can’t monetize snapchat.

What I share on LinkedIn is what sorority girls tell their fathers about their college weekends…

If you aren’t a teenager you probably have never heard of YouNow but it’s not a huge threat nor easily monetized. It’s also makes me never want to have daughters.

Everything I think about Yelp was summarized perfectly on a South Park episode. Too many Yelp reviewers are pompous punks stringing small businesses by their hamstrings over how many stars they deserve. Facebook is about to unleash a competing feature and I hope Yelp is something I tell my kids about in the same sentence as Netscape.

Twitter? – A declining user base, a stupid product, and a CEO that people think is capable of running two public companies (Jack Dorsey is not Bo Jackson…).

Sidenote:

This summer I spent a month surfing off the beaten path in Sumatra, Indonesia. Most young people there wanted two things: 1) to practice their English with me 2) to be my Facebook friend. If you’re wondering how Robi in Ujung Bocur is doing, he just posted an update about his friend’s scooter a few hours ago. I’m sure his Facebook feed is filled with pointless quizzes and kitten videos as well.

****Disclaimer: These are just my opinions and you should do your own research before making any investing decisions. Past performance does not guarantee future results. My opinion is not the gospel and use your own judgement. Investing because “so and so says it is a good idea” is not a good enough reason to put your money into something. I’ll either be proved right or wrong, but don’t drag my butt to court. Any other legal jargon I’m supposed to put at the bottom of these things applies as well….
Basically, invest at your own risk.